Pioneer Investments fails to settle with top bond managers

Dublin-based executives suspended over alleged attempt to set up rival business

UniCredit head office in Milan: Pioneer’s parent UniCredit, Italy’s largest banking group, is reportedly set to announce next week plans to raise up to €13 billion through a share sale to bolster its balance sheet. Photograph: Alessia Pierdomenico/Bloomberg

The largest asset manager in Dublin, Pioneer Investments, has failed to settle a legal case with two star bond managers in its Dublin operation who were recently suspended amid claims that they were involved in an attempt to set up a rival asset manager, the High Court has heard.

Pioneer alleges Tanguy Le Saout, head of European fixed income, and Ali Chabaane, head of portfolio construction, have, as a result of their alleged actions, lost entitlement to deferred payments of €6 million and €2 million, respectively.

Ms Justice Leonie Reynolds was told yesterday morning that efforts were under way to resolve the case, which Pioneer took last month against the two men and two senior human resources personnel. However, these fell through and the judge ruled that Pioneer was entitled to court orders allowing it to seize and image certain material on work devices of all four defendants.

The two Pioneer human resource officials named as co-defendants in the case are Ciara McCarville and Mary Fitzpatrick.

Pioneer claims Mr Le Saout lost his entitlement to €6 million in November 2015, when, it alleges, he agreed with Ms Fitzpatrick that she could make a false allegation to the effect she had been unfairly accused of being in a relationship with him.

Pioneer claims the alleged activities of the defendants have potential to cause “very serious harm” to Pioneer, particularly as its parent, Italian bank UniCredit, is seeking sell the unit. Earlier this week, UniCredit said it had entered exclusive talks to sell Pioneer, which has €225 billion of assets under management and has housed its European investment base in Dublin since 1998, to French asset manager Amundi, in a deal said to be worth about €3.5 billion.

In court documents, Pioneer said its information to date suggested the defendants’ planned rival firm had a business plan to have €5 billion in assets under management by year five. The court was also told the defendants sometimes used the WhatsApp and SnapChat messaging services in efforts to avoid detection of their activities.

Some of the defendants, in affidavits, accepted that they were planning to operate in competition to Pioneer but they denied any breach of fiduciary duty or contractual obligation to their employer.

Addressing concerns by the defendants that some 80 per cent of Pioneer’s 473 staff in Dublin may be at risk of losing their jobs as a result of its sale, the judge said the court could not be asked to speculate on what happened in relation to the outcome of the sale. Ms Justice Reynolds said she was satisfied that UniCredit was solvent, rejecting assertions made by the defendants that questioned the bank’s financial position.

Still, Italy’s largest banking group is reportedly set to announce next week plans to raise up to €13 billion through a share sale to bolster its balance sheet, which will be a major test of confidence in the country’s wider banking system.

The sector is grappling with €360 billion worth of bad loans and political uncertainty following the defeat of a constitutional referendum on Sunday, which prompted prime minister Matteo Renzi to announce he was quitting.

Ms Justice Reynolds adjourned to Monday consideration of further matters, including an application by Marcus Dowling, for Pioneer, for orders allowing his side’s experts to inspect the material on the devices. Earlier orders which restrained any reporting of the proceedings were also lifted.

The Irish Times first reported on Wednesday that Pioneer, a unit of Italian banking giant UniCredit, had suspended Mr Le Saout and Mr Chabaane after the fund manager informed clients of the matter.